5 Banks for Business Loans
Business loans are considered as bread and butter for every business to sustain the competition in the market and grow further. When you need funds to grow your business further, affording from the pocket or funding from the relatives is impossible, the only option that you look at is commercial finances Getting a commercial finance for a start-up business is not a child’s play, many factors are considered by the lender before giving the approval. It is important for you to know what to include in the loan application so that you don’t face a rejection from the lender. Start your journey by knowing the hurdles you face in getting the commercial loan and know how to overcome them.
Know your loan amount eligibility
Banks calculate loan amount that can be lent you based on your debt service ratio. You should know your debt service ratio before you approach the bank to apply for a commercial loan. Apply for a loan amount that you are eligible for so that the chances of loan rejection are less. You can calculate debt service ratio with the formula
Debt Service Ratio = Monthly Free Cash Flow / Monthly Loan Payment.
Personal credit score
When you are yet to establish your business credit score, your personal creditworthiness is considered by the lender to sanction a commercial loan. They may ask you personal guarantee which obliges you to repay the business loan in case the business is not able to afford it. Much emphasis is placed on your credit score before the loan is approved.
- Ensure a good credit score,
- make sure you dispute errors in the credit report
- Keep your debt to credit ratio below 30%
- Pay off all your outstanding bills on cards.
Business finance should be backed by right collateral to improve the chances of loan approval apart from good debt service ratio and personal credit score.
Top 5 banks offering business loans
Now, you have known a right way to handle hurdles you face in getting business finances, explore these 5 banks that offer business loans and take an informed decision after comparison.
HDFC is one among the nationalised banks in India and conquers good market share in terms of customers.
Interest rate: 15.50%-18.30%
Low EMI: 3,491 per lakh
Loan tenure:12 to 36 months
Loan amount: 5 lakhs to 15 lakhs
Early foreclosure option after 12 months charges reduced as the loan tenure finishes
Interest rate: 12.5%-16.65%
Tenure: 12 months to 18 months
Loan amount: 10,000,000
Early foreclosure: allowed after 6 EMIs
Tenure :12-48 months
Loa amount :500,000 to 3000,000
Early Foreclosure : can pay up to 25% in a year with out charges after 1st EMI
Interest : 16%-24%
Tenure :24-36 months
Loan amount: 100,000 to 500,000
Interest : 16% to 19.99%
Tenure: 24 months to 60 months
Loan amount : 300,000 to 7500,000
Early foreclosure: 6% before 6 months and 5% later
BUSINESS LOANS ON YOUR WAY